System and method for processing and for funding a transaction

ABSTRACT

Method for processing a transaction, the method comprising automatically requesting an automated clearing house transfer from a source account to a destination account via an automated clearing house network, receiving the automated clearing house transfer, adjusting destination account data associated with the destination account by increasing a balance of the destination account by an amount of the transfer, receiving transaction data from a merchant indicating an attempted transaction, the transaction data including a transaction amount and data identifying the destination account, processing the attempted transaction with a credit card interchange rate, and transmitting data to the merchant indicating one of authorization of the attempted transaction and denial of the attempted transaction.

FIELD

The present application relates to a banking system and method and, moreparticularly, to a system and method for providing transactional accessto a demand deposit account while imposing a credit card interchangerate on the respective transaction.

BACKGROUND

Credit cards, debit cards and other types of transaction cards arecommonly used today by consumers to fund transactions at or withmerchants. When credit cards and debit cards are used by consumers,interchange rates are routinely imposed by a bankcard association. Aninterchange rate is a percentage of a transaction amount and thepercentage is set by the bankcard association. Acquiring banks arecharged the interchange rate for a consumer transaction by the bankcardassociation. An acquiring bank is a financial institution that contractswith merchants to settle electronic transactions. For credit cardtransactions, an acquiring bank provides the merchant with its creditcard processing account. This acquiring bank sends credit card andpurchase information for transactions to a credit card association (suchas Visa® and MasterCard®), which forwards it to the issuer associatedwith the credit card. The credit card association also collectsinterchange revenue due to the interchange rate imposed for eachtransaction associated with the respective credit or debit card andforwards at least a portion of that revenue to the issuer. Interchangerates for credit card transactions are higher than interchange rates fordebit cards.

Also commonly used today in the banking industry is automated clearinghouse (“ACH”) transactions. ACH is a form of electronic payment.Specifically, ACH is an electronic fund transfer through an ACH networkincluding the Federal Reserve Bank from one account to another account,such as to a checking or savings account. ACH is typically used toprocess payments for settlement within one or two business days. ACHtransactions are settled in a manner similar to the way checks aresettled: The clearinghouse takes all ACH files received daily from itsmember banks, sorts them by the originating bank (the bank where thecheck was cashed or deposited) and the paying bank (the bank againstwhich the check was drawn), totals the accounts, and credits or debitsappropriate accounts accordingly. A company can issue an ACH debit for apurchase amount through the ACH network to a customer's account at thecustomer's bank. A company can also initiate a purchase upon receipt ofan ACH credit.

Numerous financial institutions, such as credit card companies andbanks, and other companies, such as airline carriers, hotels andretailers, offer membership reward programs to their customers.Traditionally, membership reward programs are funded at least in part bythe interchange revenue collected by the respective financialinstitution. These membership reward programs often provide theirparticipants the ability to earn and accumulate units or portionsthereof that are operable as currency, such as points, stars and miles.Participants earn such units, for example, when conducting transactionswith a qualified account or engaging services with the qualifiedaccount. The units are redeemable for merchandise or services withparticipating merchants. Further, these membership reward programs offerother rewards to participants for being enrolled in the respectivereward program that do not involve the redemption of points or the like,such as a companion airline ticket upon purchasing an airline ticketwith a qualified account. Depending on the reward program enrolled in bya participant, certain rewards may not be available to the respectiveparticipant. For instance, program X may not offer particularmerchandise or services to its participants, whereas program y doesoffer such merchandise or services. A participant may use a transactioncard associated with the qualified account to conduct the respectivetransaction. Reward units typically accrue at a rate of one unit forevery dollar spent using the account and the accrued units operate ascurrency. Some entities restrict purchasing to particular merchants toearn reward units, whereas other financial institutions have no suchrestrictions. The maximum reward units a participant can earn annuallyare usually unlimited. Sometimes, however, a cap is imposed on theamount of reward units a participant can earn. Additionally, rewardunits usually do not accumulate on cash advances, convenience checks,balance transfers, fees or adjustments. When merchandise purchased withthe respective account is returned, the account credit will result in areduction of reward units.

Participants usually seek to accumulate enough reward units to purchasemerchandise or services. For instance, a participant may seek toaccumulate enough reward units to purchase a particular product from anassociated merchant or purchase an airline ticket from anotherassociated merchant. Depending on the program, only certain merchantsare considered qualified merchants with whom reward units can beredeemed towards a purchase.

Membership reward programs also often offer participants other rewards,incentives or the like instead of or in addition to the ability toaccumulate reward units. For example, some membership reward programsreturn to a participant a predetermined percentage of a transactionamount or of an amount spent during a predetermined period (referred toas “cash back”) either as a credit to an account or by check, offerparticipants discounts on select merchandise or services, andcomplimentary merchandise or services.

Typically, participants earn rewards when using transaction cardsassociated with a credit line, such as conventional credit cards. Fewdebit card issuers, however, offer rewards for use of their debit cardsat least in part because companies like Mastercard® and Visa® collectlower interchange revenue from merchants and consequently pay less tothe respective issuers. As a result, debit card issuers do not havesufficient revenue to fund programs such as rewards programs. Moreover,consumers commonly obtain their debit cards from the same banks whichprovide their checking or other demand deposit account.

Therefore, a need exists for a system and method that utilizes atransaction card with a credit card interchange rate which is paid on apredetermined basis, such as daily, weekly or monthly, through ACH to ademand deposit account, the demand deposit account being associated withthe issuer of the transaction card or a different financial institution.As a result of imposing the credit card interchange rate, a need existfor providing such account holders of the transaction card issuers withrewards for engaging in transactions.

SUMMARY

An aspect of the present application provides for a method forprocessing a transaction, the method comprising automatically requestingan automated clearing house transfer from a source account to adestination account via an automated clearing house network, receivingthe automated clearing house transfer, adjusting destination accountdata associated with the destination account by increasing a balance ofthe destination account by an amount of the transfer, receivingtransaction data from a merchant indicating an attempted transaction,the transaction data including a transaction amount and data identifyingthe destination account, processing the attempted transaction with acredit card interchange rate, and transmitting data to the merchantindicating one of authorization of the attempted transaction and denialof the attempted transaction.

Another aspect of the present application provides for a method forprocessing a transaction, the method comprising receiving an automatedclearing house transfer from a source account via an automated clearinghouse network, adjusting destination account data associated with adestination account by increasing a balance of the destination accountby an amount of the transfer, receiving transaction data from a merchantindicating an attempted transaction, the transaction data including atransaction amount and data identifying the destination account,processing the attempted transaction with a credit card interchangerate; and transmitting data to the merchant indicating one ofauthorization of the attempted transaction and denial of the attemptedtransaction.

A further aspect of the present application provides for a method forprocessing a transaction, the method comprising receiving transactiondata from a merchant indicating an attempted transaction, thetransaction data including a transaction amount and data identifying thedestination account, processing the attempted transaction with a creditcard interchange rate, requesting an automated clearing house transferfor the transaction amount to be transmitted from a source account to adestination account via an automated clearing house network, receivingthe automated clearing house transfer, and transmitting data to themerchant indicating one of authorization of the attempted transactionand denial of the attempted transaction.

A still further aspect of the present application provides for a systemfor processing a transaction comprising a memory unit for storingdestination account data including data indicating a balance of adestination account and data identifying the destination account, and aprocessing unit operatively connected to the memory unit, the processingunit programmed to automatically request an automated clearing housetransfer from a source account to the destination account via anautomated clearing house network, receive the automated clearing housetransfer, adjust the destination account data associated with thedestination account by increasing the balance of the destination accountby an amount of the transfer, receive transaction data from a merchantindicating an attempted transaction, the transaction data including atransaction amount and the data identifying the destination account,process the attempted transaction with a credit card interchange rate,and transmit data to the merchant indicating one of authorization of theattempted transaction and denial of the attempted transaction.

An additional aspect of the present application provides for a systemfor processing a transaction comprising a memory unit for storingdestination account data including data indicating a balance of adestination account and data identifying the destination account, and aprocessing unit operatively connected to the memory unit, the processingunit programmed to receive an automated clearing house transfer from asource account via an automated clearing house network, adjust thedestination account data associated with the destination account byincreasing the balance of the destination account by an amount of thetransfer, receiving transaction data from a merchant indicating anattempted transaction, the transaction data including a transactionamount and the data identifying the destination account, processing theattempted transaction with a credit card interchange rate, andtransmitting data to the merchant indicating one of authorization of theattempted transaction and denial of the attempted transaction.

Another aspect of the present application provides for a system forprocessing a transaction comprising a memory unit for storingdestination account data including data indicating a balance of adestination account and data identifying the destination account, and aprocessing unit operatively connected to the memory unit, the processingunit programmed to receive an automated clearing house transfer from asource account via an automated clearing house network, adjust thedestination account data associated with the destination account byincreasing the balance of the destination account by an amount of thetransfer, receive transaction data from a merchant indicating anattempted transaction, the transaction data including a transactionamount and the data identifying the destination account, processing theattempted transaction with a credit card interchange rate, andtransmitting data to the merchant indicating one of authorization of theattempted transaction and denial of the attempted transaction.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 illustrates an exemplary transaction system according to theexemplary embodiments of the present application;

FIG. 2 illustrates an exemplary flow diagram for processing atransaction according to the exemplary embodiments of the presentapplication;

FIG. 3 illustrates another exemplary flow diagram for processing atransaction according to the exemplary embodiments of the presentapplication; and

FIG. 4 illustrates in more detail the exemplary transaction system shownin FIG. 1.

DETAILED DESCRIPTION

The exemplary embodiments of the present application are described withreference to an account holder having a plurality of accounts and atleast one associated transaction card linked to at least one of theplurality of accounts. The account holder can use the card, for example,to make a purchase at or with a merchant. The appearance of thetransaction card can represent a credit card, a debit card, an ATM cardand a smart card and, thus, is not meant to be limited to any particulartype of card and associated account. Transactions conducted with thetransaction card, however, are processed using a credit card interchangerate, as described herein in more detail. As is well known in the art,some transactions can be conducted without presenting a physical card ata point-of-sale (“POS”). Rather, an account holder can present apredetermined number associated with one or more accounts to perform atransaction. Further, transaction cards can be administered by variouscompanies, such as banks, credit card companies, or other institutionsor companies.

FIG. 1 illustrates an exemplary transaction system 100 according to theexemplary embodiments of the present application. Transaction system 100includes merchant 110, financial institution A 125 coupled to merchant110 via debit/credit network 115, and financial institution B 150.Financial institution A 125 includes processing unit 120, interestdetermination unit 130, reward determination unit 135 and memory unit170 having stored therein source account data 140 and destinationaccount data 145. Source account data is associated with source account425 and destination account data 145 is associated with destinationaccount 410, depicted in FIG. 4. Alternatively, the functionalityprovided by interest determination unit 130 and reward determinationunit 135 can instead be provided by processing unit 120 or inconjunction with processing unit 120. Financial institution B 150includes processing unit 155 coupled to memory unit 160 having storedtherein source account data 175. Source account data 175 is associatedwith source account 415, also shown in FIG. 4. Financial institution A125 transmits data to and receives data, for instance, ACH transfer 425as shown in FIG. 4, from financial institution B 150 via ACH network165. The use of debit/credit network 115 for transmitting and forprocessing credit and debit transaction data is well known in the artand therefore is not described in detail herein. Similarly, the use ofACH network 165 for transmitting and for processing ACH transfer 425 iswell known in the art and hence is also not described in detail herein.

Transaction card 105 is operable for account holder 180 to purchase ator with merchant 110 to cause data to be transmitted to and fromfinancial institution A 125 regarding that transaction. Financialinstitution A 125 issues to account holder 180 transaction card 105,financial institution A 125 being a credit card company, a bank, amortgage company or any other type of financial institution or company.Like financial institution A 125, financial institution B 150 is linkedto financial institution A 125 and can be a credit card company, a bank,a mortgage company or any other type of financial institution orcompany.

Memory unit 170 and memory unit 160 associated with financialinstitution A 125 and financial institution B 150, respectively, caninclude various types of memory storage devices, for example, one ormore databases, relational or otherwise and, therefore, is not meant tobe limited to any particular type of storage device or quantity ofstorage devices operating alone or in combination. Memory unit 170stores data including, for instance, source account data 140 anddestination account data 145, and memory unit 160 stores data including,for example, source account data 175. As will be appreciated by a personhaving ordinary skill in the art, memory unit 170 and memory unit 160can store other data associated with account holder 180, such aspersonal data, transaction history data, security data and dataassociated with accumulated and redeemed rewards.

Debit/credit network 115 can be the MasterCard®/Visa® network or otherproprietary networks, such as Plus, Novus (debit), Diner's Club®(credit) and American Express®, the operation and use of which are wellknown in the art and are, thus, not described herein. Transaction dataassociated with a transaction between account holder 180 and merchant110 is transmitted using debit/credit network 115. Transaction data canalso be transmitted through an Internet link, through a mail link andthrough a telephone link instead of debit/credit network 115 or incombination with debit/credit network 115.

The components of FIG. 1 may be implemented through hardware, software,and/or firmware. The components in transaction system 100 are notlimited to those illustrated.

FIG. 2 illustrates an exemplary flow diagram for processing and forfunding a transaction according to the exemplary embodiments of thepresent application. Financial institution A 125 is electronicallycoupled to financial institution B 150 so that funds can beelectronically transferred to or from the respective financialinstitution via ACH network 165. In an exemplary embodiment, ACHtransactions occur automatically on a recurring basis at a predeterminedtime, for instance, daily, weekly, monthly or yearly, or a combinationthereof, as described herein in more detail. Alternatively, ACHtransactions can occur upon request, as opposed to automatically, forexample, by account holder 180, by financial institution A 125 and/or byfinancial institution B 150, also described herein in more detail withreference to FIG. 3.

In FIG. 2, ACH transfer 425 occurs automatically at a predetermined timefor a predetermined amount before a transaction is attempted by accountholder 180. The automatic ACH transfer 425 is either initiated byfinancial institution A 125 via ACH request 430, described herein withreference to 205-215, or is initiated by financial institution B 165, asdescribed herein with reference to 220-225. When initiated by financialinstitution A 125 by ACH request 430, a predetermined amount of fundsare requested by processing unit 120 to be transferred to destinationaccount 410 associated with financial institution A 125 from sourceaccount 415 associated with financial institution B 150, in 205, asshown in FIG. 2. Processing unit 120 receives the requested ACH transferfrom financial institution B 150, in 210, and updates destinationaccount data 145 stored in memory unit 170 associated with accountholder 180 by increasing the stored balance data by the amount of ACHtransfer 425, in 215. Further, processing unit 155 of financialinstitution B 150 updates source account 4.15, in particular, sourceaccount data 175 stored in memory unit 160, also associated with accountholder 180 by decreasing the stored balance data by the amount of ACHtransfer 425. In an exemplary embodiment of the present application, theamount of the automatic ACH transfer 425 is determined by the respectiveaccount holder, for instance, account holder 180, and the predeterminedtime, for instance, daily, weekly, monthly or yearly, when ACH transfer425 occurs is also determined by that account holder.

When financial institution B 150 initiates ACH transfer 425, processingunit 155 of financial institution B 150 automatically transfers thepredetermined amount of funds from source account 415 to destinationaccount 410 at financial institution A 125 at the predetermined time viaACH transfer 425 through ACH network 165. ACH transfer 425 is receivedby processing unit 120, in 220. Similar to when financial institution A125 initiates ACH transfer 425, processing unit 120 adjusts destinationaccount data 145 including the balance data by increasing the balancedata by the amount of ACH transfer 425, in 225. Also, processing unit155 adjusts source account data 175 by decreasing the stored balancedata by the amount of ACH transfer 425.

Thus, processing unit 120 of financial institution A 125 canautomatically request the transfer of the predetermined amount of fundsfrom source account 415 to destination account 410 via ACH transfer 425at the predetermined time or processing unit 155 of financialinstitution B 150 can automatically transfer the predetermined amount offunds from source account 415 to destination account 410 at financialinstitution A 125 via ACH transfer 425 at the predetermined time, asdescribed herein. In both instances, an account balance of destinationaccount 410 is increased which is reflected by destination account data145 stored in memory unit 170. Accordingly, funds will be available foraccount holder 180 to conduct at least one transaction at or withmerchant 110, the transaction having imposed thereon a credit cardinterchange rate.

As shown in FIG. 2, after the occurrence of ACH transfer 425, accountholder 180 presents transaction card 105 to merchant 110, for instance,at a POS for conducting a transaction with merchant 110. A device ordevices located at merchant 110, such as a POS terminal, read a magneticstripe located on transaction card 105 or a memory unit located ontransaction card 105 if transaction card 105 is a smart card or thelike. Transaction data including at least a transaction amount and anaccount number associated with transaction card 105 is received byprocessing unit 120 of financial institution A 125 via debit/creditnetwork 115, in 230. In an example embodiment, the received accountnumber is associated with destination account 410 and destinationaccount data 145 stored in memory unit 170. The account number, however,can be associated with another account linked to destination account410.

In transaction system 100, a conventional credit card interchange rate420 is imposed for the transaction conducted by account holder 180 atmerchant 110 using transaction card 105. Accordingly, the interchangerevenue earned by the issuer of transaction card 105, for instance,financial institution 125, is greater than the interchange revenueearned from a debit card interchange rate.

Once the transaction data is received by processing unit 120, in 230,processing unit 120 processes the attempted transaction by accountholder 180, in 235. Specifically, processing unit 120 determines fromthe received transaction data the account number associated withtransaction card 105 used by account holder 180 at merchant 110 and thetransaction amount. Since in an exemplary embodiment the account numberis associated with destination account 410, processing unit 120 accessesdestination account data 145 stored in memory unit 170 to determinewhether to authorize the attempted transaction, in 240. Moreparticularly, processing unit 120 compares the balance of destinationaccount 410 to the transaction amount to determine whether the balanceis greater than or equal to the transaction amount. If the balance ofdestination account 410 is greater than or equal to the transactionamount, then processing unit 120 authorizes the attempted transactionand transmits authorization data to merchant 110 via debit/creditnetwork 115, in 250. If, however, the balance of destination account 410is less than the transaction amount, then processing unit 120 denies theattempted transaction and transmits denial data to merchant 110 viadebit/credit network 115, in 245. Alternatively, if the balance ofdestination account 410 is less than the amount of the attemptedtransaction, a credit line associated with financial institution A 125or financial institution B 150, or another demand deposit accountassociated with account holder 180 is accessed by processing unit 120 tocover the amount of the attempted transaction or a portion thereof notcovered by the balance of destination account 410. Account holder 180can also be charged a predetermined transaction fee for utilizing theoverdraft protection benefit associated with transaction card 105.

Destination account 410 may have a balance reflected by destinationaccount data 145, described herein with reference to FIGS. 2-4. In anexemplary embodiment, if destination account 410 has a balance, accountholder 180 earns interest at a fixed or variable interest rate on theaccount balance. The fixed or variable interest rate can be determinedby financial institution A 125 or determined based in whole or in parton any other known method for determining interest rates on depositedfunds. Interest determination unit 130 determines an amount of interestthat has accrued on a balance of destination account 145 at apredetermined time, for instance, on a daily, weekly, monthly or yearlybasis. Thereafter, processing unit 120 receives data from interestdetermination unit 130 indicating the accrued interest and stores thisdata in memory unit 170 in association with destination account 410 sothat destination account data 145 reflects the increase in the accountbalance.

In an alternative embodiment described in more detail herein withreference to FIG. 3, funds are transferred from source account 415 todestination account 410 by ACH transfer 425 only upon request by accountholder 180 after (or before) a respective attempted transaction byaccount holder 180. In a further alternative embodiment, funds aretransferred from source account 415 to destination account 410 byfinancial institution A 125 or by financial institution B 150automatically after account holder 180 initiates the transaction withmerchant 180. For instance, upon processing unit 120 receiving data frommerchant 110 indicating a transaction amount, processing unit 120automatically transmits ACH request 430 to processing unit 155requesting an ACH transfer equal to the transaction amount betransferred to destination account 410. Alternatively, account holder180 can contact financial institution A 125 or financial institution B150 to request ACH transfer 425 for a specific amount of money at leastequal to the transaction amount. Account holder 180 can also requestwhen ACH transfer 425 should occur to assure that the appropriate fundsare present in destination account 410 for covering the transactionamount and/or any future transactions using transaction card 105 atmerchant 110.

FIG. 3 illustrates another exemplary flow diagram for processing and forfunding a transaction according to the exemplary embodiments of thepresent application. As shown in FIG. 3, like the exemplary embodimentdescribed herein with reference to FIG. 2, transaction data including atleast a transaction amount and an account number associated withtransaction card 105 is received by processing unit 120 of financialinstitution A 125 via debit/credit network 115, in 310.

Processing unit 120 then requests ACH transfer 425 by transmitting ACHrequest 430 for an amount equal to the transaction amount to beelectronically transferred from source account 415 associated withfinancial institution B 150 to destination account 410 associated withfinancial institution A 125, in 315. ACH transfer 425 can result eitherfrom account holder 180 requesting the ACH transfer or from financialinstitution A 125 requesting the ACH transfer. Processing unit 120thereafter receives the funds through ACH transfer 425 via ACH network165, in 320. If source account 415, however, does not have sufficientfunds, a credit line associated with financial institution A 125 orfinancial institution B 150, or another demand deposit accountassociated with account holder 180 is accessed by processing unit 120 tocover the amount of the attempted transaction or a portion thereof.Account holder 180 can also be charged a predetermined transaction feefor utilizing the overdraft protection benefit associated withtransaction card 105.

Processing unit 120 updates destination account data 145 stored inmemory unit 170 associated with account holder 180 by increasing thestored balance data by the amount of ACH transfer 425, in 325. Further,processing unit 155 of financial institution B 150 updates sourceaccount data 175 stored in memory unit 160 also associated with accountholder 180 by decreasing the stored balance data by the amount of ACHtransfer 425. Processing unit 120 then authorizes the attemptedtransaction and transmits authorization data to merchant 110 viadebit/credit network 115, in 330. Alternatively, the authorization datais transmitted before receiving funds in 320 or before requesting ACHtransfer 425 in 315. Before or after transmitting the authorizationdata, processing unit 120 again updates destination account data 145stored in memory unit 170 associated with account holder 180 bydecreasing the stored balance data by the transaction amount, in 325. Inan alternative embodiment, processing unit 120 does not update thebalance data of destination account 410, for instance, by firstincreasing the balance data and then decreasing the balance data by thesame amount, as described herein with reference to 325 and 335. Rather,the balance data is not altered for the net result of the balance is thesame.

Besides requesting ACH transfer 425 on a per transaction basis, ACHtransfer 425 can occur once a day, for example, at the end of the day,for an amount equal to the cumulative amount of all transactionsconducted by account holder 180 using transaction card 105 during thatrespective day. Alternatively, ACH transfer 425 can occur after apredetermined number of hours or days have elapsed, the amount of ACHtransfer 425 equaling the cumulative amount of all transactionsconducted by account holder 180 during the predetermined number of hoursor days preceding the transfer.

In another exemplary embodiment of the present application, the sourceaccount from which a predetermined amount of money originates isassociated with financial institution A 125, as opposed to financialinstitution B 150. For example, source account data 140 associated withsource account 425 is stored in memory unit 170 of financial institution125, as depicted in FIG. 1. As a result, processing unit 120 eitherautomatically or upon request by account holder 180 request transfersfrom source account 425 to destination account 410 or automaticallyreceives transfers from source account 425 as described herein withreference to FIGS. 2 and 3. As will be appreciated by a person havingordinary skill in the art, funds can be transferred internally within afinancial institution or funds can be transferred from one accountassociated with the institution to another account associated with thesame institution using ACH network 165.

Destination account 410 may have a balance reflected by destinationaccount data 145, described herein with reference to FIGS. 2-4. In anexemplary embodiment, if destination account 410 has a balance, accountholder 180 earns interest at a fixed or variable interest rate on theaccount balance. For example, destination account 410 has a balance ifthe amount of ACH transfer 425 exceeds the amount of a transaction ortransactions that need to be funded. The fixed or variable interest ratecan be determined by financial institution A 125 or determined based inwhole or in part on any other known method for determining interestrates on deposited funds. Interest determination unit 130 determines anamount of interest that has accrued on a balance of destination account145 at a predetermined time, for instance, on a daily, weekly, monthlyor yearly basis. Thereafter, processing unit 120 receives data frominterest determination unit 130 indicating the accrued interest andstores this data in memory unit 170 in association with destinationaccount 410 so that destination account data 145 reflects the increasein the account balance.

As can be seen in FIG. 1, processing unit 120 is also coupled to rewarddetermination unit 135. In an exemplary embodiment, reward determinationunit 135 determines whether a respective account holder, for example,account holder 180, is entitled to a reward. If it is determined thataccount holder 180 is entitled to a reward, the particular reward isdetermined by reward determination unit 135 and then associated with anaccount, such as a reward account, of account holder 180 so that accountholder 180 can later redeem the reward.

Transactions conducted by account holder 180 using transaction card 105are processed using a credit card interchange rate as described herein.The use of a credit card interchange rate, as opposed to a lower debitcard interchange rate, affords issuers, such as financial institution125, a financial benefit and these issuers extend reward opportunitiesassociated with a reward program to account holders like account holder180.

In the present application, account holder 180 participates in a rewardprogram associated with financial institution A 125 and thereby earnsrewards, incentives or the like, for instance, by engaging intransactions with merchants, such as merchant 110, using transactioncard 105 associated with a qualified financial account, for instance,destination account 410, and later redeeming those accumulated rewards,incentives or the like with merchant 110 or with other merchants. Underthe reward program, account holder 180 has the ability to earn aplurality of reward units, such as points, for example, for purchaseswith merchant 110 and other merchants using a qualified financialaccount—destination account 410 as described herein.

The present application is applicable, to any institution or companyhaving a membership reward program associated therewith, includingfinancial institutions, airlines, supermarkets, hotels, car rentalcompanies, retail stores, Internet loyalty programs, loyalty providers,such as Carlson Companies, Inc. and Cendant Corporation, and Visa® andMasterCard® that offer rewards, incentives or the like. In an exemplaryembodiment of the present application, the membership reward program ismanaged directly by the institution or company, for instance, financialinstitution A 125. Alternatively, the membership reward program ismanaged by a third party associated with financial institution A 125.Financial institution A 125 may or may not be in a partnership with athird party and/or other party. For instance, in the event financialinstitution A 125 has a partnership relationship with the third partyand/or other party, the relationship may involve a co-branding.

The membership reward program can also be operable as an independentreward program, as an accelerator reward program, as a coalition rewardprogram or otherwise, or as a combination thereof. As would beappreciated by a person having ordinary skill in the art, when enrolledin an accelerator program, an account holder accelerates the earning ofreward units or the like in another reward program independent of theaccelerator program, for example, when conducting transactions with anaccount linked to the accelerator program. A coalition reward program,such as Upromise (www.upromise.com), is operable for account holders toearn rewards from a particular suite of merchants. Other reward programscan be associated with the coalition reward program. When an accountholder conducts a transaction with one of the merchants within the suiteusing one of these other reward programs, that account holder earnsadditional rewards. For instance, a reward program associated with acoalition reward program is operable for account holders to earn X % forevery transaction regardless of the merchant and an additional Y % fortransactions conducted with one of the merchants within the suite and anadditional Z % at another one of the merchants within the suite.

Accordingly, two or more membership reward programs can be linkedtogether so that account holder 180 earns reward units or the like in asingle rewards account from various sources.

The exemplary embodiments of the present application are describedherein with reference to reward units as being points, and earning andredeeming the same. The present application, however, is not limited topoints, as points are units merely symbolizing a form of currency foruse towards transactions. Hence, other symbols operable as currency areequally applicable to the exemplary embodiments of the presentapplication, for instance, miles, stars, dollars, cash, rebates orcredits.

In an exemplary embodiment, account holder 180 participating in themembership reward program earns (and redeems) points when conductingtransactions with merchant 110 and other merchants. These points areearned by account holder 180, for example, upon account holder 180conducting transactions with merchant 110 using destination account 410.Earning and redeeming currency units, such as points, associated with amembership reward program are well known in the art and are thereforenot described in detail herein. Account holder 180 can also earn andredeem other rewards, including, for example, gift certificates,coupons, companion airplane tickets, or other goods or services. Thepresent application is not limited to these rewards, as they are merelyexemplary.

According to the embodiments described in the present application,transaction system 100 is operable for an institution (for example,financial institution A 125) other than the institution (for example,financial institution B 150) offering account holder 180 a demanddeposit account (for example, source account 415), such as a checkingaccount, to issue a transaction card linked to this demand depositaccount through ACH network 165. To merchant 110, transaction card 105appears as a credit card and is processed as a credit card since acredit card interchange rate is imposed on each transaction. To accountholder 180, though, transaction card 105 operates like a debit card,because with every transaction, at the end of each day or at some othertime, an ACH transaction would debit source account 415 of accountholder 180 for the amount of the purchase(s). Hence, transaction card105 is, for example, a credit card behaving like a debit card due to theuse of ACH. The use of ACH network 165 enables account holder 180flexibility in that account holder 180 can get a transaction card fromone institution, for example, a credit card company, while having his orher demand deposit account at another institution, such as a bank.

The embodiments described above are illustrative examples of the presentapplication and it should not be construed that the present applicationis limited to these particular embodiments. Various changes andmodifications may be effected by one skilled in the art withoutdeparting from the spirit or scope of the invention as defined in theappended claims.

1. A method for processing a transaction, the method comprising:automatically requesting an automated clearing house transfer from asource account to a destination account via an automated clearing housenetwork; receiving the automated clearing house transfer; adjustingdestination account data associated with the destination account byincreasing a balance of the destination account by an amount of thetransfer; receiving transaction data from a merchant indicating anattempted transaction, the transaction data including a transactionamount and data identifying the destination account; processing theattempted transaction with a credit card interchange rate; andtransmitting data to the merchant indicating one of authorization of theattempted transaction and denial of the attempted transaction.
 2. Themethod as set forth in claim 1, wherein automatically requesting theautomated clearing house transfer includes automatically requesting theautomated clearing house transfer at a predetermined time for apredetermined amount of money.
 3. The method as set forth in claim 2,wherein the predetermined time is on a recurring basis.
 4. The method asset forth in claim 1, wherein automatically requesting the automatedclearing house transfer includes automatically requesting the automatedclearing house transfer on a transactional basis or on request by one ofan associated account holder and an associated financial institution. 5.The method as set forth in claim 3, wherein the recurring basis occursone of daily, weekly, monthly and yearly.
 6. The method as set forth inclaim 1, wherein the source account is one of a checking account, asavings account and a money market account.
 7. The method as set forthin claim 1, wherein the destination account is one of a checkingaccount, a savings account and a money market account.
 8. The method asset forth in claim 1, wherein the source account and the destinationaccount are managed by the same financial institution.
 9. The method asset forth in claim 6, wherein the financial institution is one of a bankand a credit card company.
 10. The method as set forth in claim 1,wherein receiving the transaction data from the merchant includesreceiving the data from the merchant via a proprietary credit network,the proprietary credit network being associated with one of VISA®,MasterCard®, Plus, Novus, Diner's Club® and American Express®.
 11. Themethod as set forth in claim 1, wherein processing the attemptedtransaction with the credit card interchange rate includes accessing thebalance of the destination account to determine whether the balance isgreater than or equal to the transaction amount, if it is determinedthat the balance is greater than or equal to the transaction amountauthorizing the attempted transaction, and if it is determined that thebalance is not greater than or equal to the transaction amount, denyingthe attempted transaction.
 12. The method as set forth in claim 1,wherein processing the attempted transaction with the credit cardinterchange rate includes accessing the balance of the destinationaccount to determine whether the balance is greater than or equal to thetransaction amount, if it is determined that the balance is greater thanor equal to the transaction amount authorizing the attemptedtransaction, and if it is determined that the balance is not greaterthan or equal to the transaction amount, one of reprocessing theattempted transaction and accessing a line of credit associated with atleast one of the source account and the destination account for fundingthe attempted transaction or at least a portion of the attemptedtransaction.
 13. The method as set forth in claim 12, wherein an accountholder associated with the source account and the destination account ispresented with an option of reprocessing the attempted transaction oraccessing the line of credit associated with the at least one of thesource account and the destination account.
 14. The method as set forthin claim 1, wherein the credit card interchange rate is a percentage ofthe transaction amount.
 15. The method as set forth in claim 1, furthercomprising: providing interest at one of a fixed interest rate and avariable interest rate on at least a portion of the balance of thedestination account, the interest accruing after expiration of apredetermined period of time.
 16. The method as set forth in claim 1,further comprising: providing a reward to an account holder associatedwith the source account and the destination account, if the attemptedtransaction was authorized.
 17. The method as set forth in claim 16,wherein providing the reward includes assigning at least one reward unitto another account associated with the destination account, the at leastone reward unit being determined according to the transaction amount ofthe attempted transaction.
 18. The method as set forth in claim 17,wherein the at least one reward unit includes one of at least one pointand at least one mile.
 19. The method as set forth in claim 16, whereinthe reward includes one of a discount on the transaction amount of theattempted transaction, a gift certificate, a coupon, a good and aservice.
 20. A method for processing a transaction, the methodcomprising: receiving an automated clearing house transfer from a sourceaccount via an automated clearing house network; adjusting destinationaccount data associated with a destination account by increasing abalance of the destination account by an amount of the transfer;receiving transaction data from a merchant indicating an attemptedtransaction, the transaction data including a transaction amount anddata identifying the destination account; processing the attemptedtransaction with a credit card interchange rate; and transmitting datato the merchant indicating one of authorization of the attemptedtransaction and denial of the attempted transaction.
 21. The method asset forth in claim 20, wherein receiving the automated clearing housetransfer includes receiving the automated clearing house transfer at apredetermined time for a predetermined amount of money.
 22. The methodas set forth in claim 21, wherein the predetermined time is on arecurring basis.
 23. The method as set forth in claim 22, wherein therecurring basis occurs one of daily, weekly, monthly and yearly.
 24. Themethod as set forth in claim 20, wherein the source account is one of achecking account, a savings account and a money market account.
 25. Themethod as set forth in claim 20, wherein the destination account is oneof a checking account, a savings account and a money market account. 26.The method as set forth in claim 20, wherein the source account and thedestination account are managed by the same financial institution. 27.The method as set forth in claim 26, wherein the financial institutionis one of a bank and a credit card company.
 28. The method as set forthin claim 20, wherein receiving the transaction data from the merchantincludes receiving the data from the merchant via a proprietary creditnetwork, the proprietary credit network being associated with one ofVISA®, MasterCard®, Plus, Novus, Diner's Club® and American Express®.29. The method as set forth in claim 20, wherein processing theattempted transaction with the credit card interchange rate includesaccessing the balance of the destination account to determine whetherthe balance is greater than or equal to the transaction amount, if it isdetermined that the balance is greater than or equal to the transactionamount authorizing the attempted transaction, and if it is determinedthat the balance is not greater than or equal to the transaction amount,denying the attempted transaction.
 30. The method as set forth in claim20, wherein processing the attempted transaction with the credit cardinterchange rate includes accessing the balance of the destinationaccount to determine whether the balance is greater than or equal to thetransaction amount, if it is determined that the balance is greater thanor equal to the transaction amount authorizing the attemptedtransaction, and if it is determined that the balance is not greaterthan or equal to the transaction amount, one of reprocessing theattempted transaction and accessing a line of credit associated with atleast one of the source account and the destination account for fundingthe attempted transaction or at least a portion of the attemptedtransaction.
 31. The method as set forth in claim 30, wherein an accountholder associated with the source account and the destination account ispresented with an option of reprocessing the attempted transaction oraccessing the line of credit associated with the at least one of thesource account and the destination account.
 32. The method as set forthin claim 20, wherein the credit card interchange rate is a percentage ofthe transaction amount.
 33. The method as set forth in claim 20, furthercomprising: providing interest at one of a fixed interest rate and avariable interest rate on at least a portion of the balance of thedestination account, the interest accruing after expiration of apredetermined period of time.
 34. The method as set forth in claim 20,further comprising: providing a reward to an account holder associatedwith the source account and the destination account, if the attemptedtransaction was authorized.
 35. The method as set forth in claim 34,wherein providing the reward includes assigning at least one reward unitto another account associated with the destination account, the at leastone reward unit being determined according to the transaction amount ofthe attempted transaction.
 36. The method as set forth in claim 35,wherein the at least one reward unit includes one of at least one pointand at least one mile.
 37. The method as set forth in claim 34, whereinthe reward includes one of a discount on the transaction amount of theattempted transaction, a gift certificate, a coupon, a good and aservice.
 38. A method for processing a transaction, the methodcomprising: receiving transaction data from a merchant indicating anattempted transaction, the transaction data including a transactionamount and data identifying the destination account; processing theattempted transaction with a credit card interchange rate; requesting anautomated clearing house transfer for the transaction amount to betransmitted from a source account to a destination account via anautomated clearing house network; receiving the automated clearing housetransfer; and transmitting data to the merchant indicating one ofauthorization of the attempted transaction and denial of the attemptedtransaction.
 39. The method as set forth in claim 38, furthercomprising: adjusting destination account data associated with thedestination account by increasing a balance of the destination accountby an amount of the automated clearing house transfer upon receiving theautomated clearing house transfer; and readjusting the destinationaccount data by decreasing the balance of the destination account one ofbefore and after transmitting the authorization data to the merchant.40. A system for processing a transaction comprising: a memory unit forstoring destination account data including data indicating a balance ofa destination account and data identifying the destination account; anda processing unit operatively connected to the memory unit, theprocessing unit programmed to automatically request an automatedclearing house transfer from a source account to the destination accountvia an automated clearing house network, receive the automated clearinghouse transfer, adjust the destination account data associated with thedestination account by increasing the balance of the destination accountby an amount of the transfer, receive transaction data from a merchantindicating an attempted transaction, the transaction data including atransaction amount and the data identifying the destination account,process the attempted transaction with a credit card interchange rate,and transmit data to the merchant indicating one of authorization of theattempted transaction and denial of the attempted transaction.
 41. Asystem for processing a transaction comprising: a memory unit forstoring destination account data including data indicating a balance ofa destination account and data identifying the destination account; anda processing unit operatively connected to the memory unit, theprocessing unit programmed to receive an automated clearing housetransfer from a source account via an automated clearing house network,adjust the destination account data associated with the destinationaccount by increasing the balance of the destination account by anamount of the transfer, receiving transaction data from a merchantindicating an attempted transaction, the transaction data including atransaction amount and the data identifying the destination account,processing the attempted transaction with a credit card interchangerate, and transmitting data to the merchant indicating one ofauthorization of the attempted transaction and denial of the attemptedtransaction.
 42. A system for processing a transaction comprising: amemory unit for storing destination account data including dataindicating a balance of a destination account and data identifying thedestination account; and a processing unit operatively connected to thememory unit, the processing unit programmed to receive an automatedclearing house transfer from a source account via an automated clearinghouse network, adjust the destination account data associated with thedestination account by increasing the balance of the destination accountby an amount of the transfer; receive transaction data from a merchantindicating an attempted transaction, the transaction data including atransaction amount and the data identifying the destination account,processing the attempted transaction with a credit card interchangerate, and transmitting data to the merchant indicating one ofauthorization of the attempted transaction and denial of the attemptedtransaction.